24/7 Wall St.

The improvement in stock prices has done nothing to bring the investment in equities by individuals higher at all. As a matter of fact, participation in stock ownership has fallen. Either these investors worry the market has topped, of they believe institutional investors have advantages as they trade to create profits based on information that is not widely available to the pubic — if it is available at all.

A new Gallup poll on stock ownership shows:

Despite strong gains in the stock market over the past year, and the Dow Jones Industrial Average’s reaching record highs in the past month, stock ownership among U.S. adults is at its lowest level in Gallup trends since 1998, essentially unchanged from a year ago. Just over half of Americans, 52%, now say they personally, or jointly with a spouse, own stock outright or as part of a mutual fund or self-directed retirement account.

Gallup’s conclusion about the data is that unemployment is a major cause of low participation. However, the public perception of whether the markets are fair likely has a greater effect.

Individual investors need only look to the news to find that certain professional investors have inside tracks on the market, whether or not these are legal. The stories of former Goldman Sachs Group Inc. (NYSE: GS) director Rajat Gupta being convicted of security fraud has to undermine confidence in whether the markets are fair. So does the news of “flash crashes” and firms that can trade shares electronically in a matter of less than a second. For an individual investor, a stock purchase can take seconds or even minutes.

Another cause for suspicion about whether the markets are set against individuals is the availability of stock research from large firms that is given to huge customers who trade with them frequently. The Facebook Inc. (NASDAQ: FB) initial public offering (IPO) debacle left some investors questioning how many shares they held and at what prices in the hours after trading in the social network began. Shortly thereafter, Morgan Stanley (NYSE: MS) was fined for giving certain investors access to estimates that Facebook revenue might be lower than expected. Obviously, individual investors burned financially by the Facebook IPO process had no such access.

Individual investors have cause to stay on the sidelines. Their impression that the markets are not fair is sometime correct.

Methodology: Results for this Gallup poll are based on telephone interviews conducted April 4 to 14, 2013, with a random sample of 2,017 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.